According to one recent study, more than 32 million small businesses are currently operating in the United States. For the sake of discussion, know that this term refers to those organizations with fewer than 500 employees.
To put that number into perspective, those small businesses create more than 1.5 million new jobs yearly, according to the same research above. That breaks down to about 64% of all new jobs annually. All told, over 90% of all businesses fall into this category - making them one of the biggest drivers of economic growth.
At the same time, any seasoned entrepreneur can tell you that starting your own business takes work, regardless of size. Getting a company off the ground in any industry takes time, effort, passion, and money. That, in essence, is what small business grants are designed to aid with. They may not be able to help with the time or effort, but they can and often do provide the necessary capital to get a company off the ground and move in the right direction.
But what are small business grants, where do they come from, and how do you take advantage of them in your situation? Answering questions like those requires keeping a few essential things in mind.
What is a Small Business Grant?
At its core, a small business grant is exactly what it sounds like - seed money that has been given to a startup company or project, typically by a government agency or nonprofit organization, that is used to provide you the best chance possible at success.
The significant advantage of getting a grant of any type is that it gives you access to funds you wouldn't have otherwise had. In the context of a small business, this can help secure that perfect location for your physical storefront or hire enough employees to get started on developing your products and services. No rule says you can only apply for and receive one grant during your lifetime - there are many that you can use for so long as you qualify.
All told, there are several different types of grants that you can apply for depending on your needs. Take those offered by the Small Business Administration, for example. The SBA regularly provides grants for research and development under the Small Business Technology Transfer program. This money is designed to encourage you to focus on R&D opportunities with "a high potential for commercialization if successful."
Another type of grant offered by the SBA has to do with those aimed at management and technical assistance. This is offered under the appropriately named Management and Technical Assistance Program.
When it comes to the SBA in particular, however, there are many important things to remember when qualifying. The SBA does not provide grants for starting or expanding a business. So opening your doors or continuing to grow can be a challenge - you need to fall into one of the above categories.
You should also be aware that new grant programs are being developed all the time based on what is happening worldwide, as evidenced by the COVID-19 relief program that went into effect in 2020. So even if you don't qualify for something with the SBA now, you should continue to check to see what is available regularly because you never know what might happen.
Is a Small Business Grant Right for my Organization?
Generally speaking, a small business grant is a good choice for your company if:
You need the capital it would provide you with, and
You meet the qualifications of whatever program you're looking at to begin with. Remember that because it is a grant, the money typically does not have to be repaid.
Of course, you should be aware of some potential disadvantages of grants moving forward. For starters, the process itself is very time-consuming. Not only do you have to research available grants to make sure that you qualify, but you're going to have to write a proposal to outline precisely what you'll be doing with that money and to prove that you qualify.
Grants are also challenging to receive in many situations because funds are limited. There isn't an endless pool of money to draw from - only a handful of organizations may get selected for a grant in any particular year. In some cases, only one organization may get selected. For both reasons, relying solely on grants when making your long-term plans as a small business owner is not a good idea.
Speaking of long-term plans, just because you received a small business grant once doesn't mean you'll automatically do so again. Renewal is not a guarantee, which again can make the future uncertain.
Finally, depending on the specific grant and who is giving out the money, there may be strings attached that you would like to be more comfortable with. Once you submit your proposal, for example, and outline precisely what you'll be doing with the funds, you have to stick to that plan.
If you find yourself in a situation where the grant money would offer significant benefits and none of the potential downsides are a deal breaker, exploring the opportunities of a small business grant is the right move to make.
Where Do I Find Small Business Grants?
Finding small business grants is something that you can do in a myriad of different ways. You can use the Small Business Administration's website to get started.
There are also many sites like Digital.com that compile lists of small business grants you can apply for in the given year. You are also encouraged to use the Internet to find Small Business Development Centers in your area and local incubators. All of these can be excellent sources of information throughout this process.
How to Apply For (and Win) Small Business Grants
Applying for small business grants typically follows the directions on the grant's website. Again, you'll need to ensure you qualify and provide documented proof. You'll also likely need to submit a proposal outlining where that money will go and why it matters.
Be as convincing and passionate as possible in your proposal while ensuring it falls within the listed guidelines. Show someone the real, tangible impact that capital will make. The more compelling you are, the better your chances of winning that grant.
In the end, small business grants certainly bring many distinct advantages. However, it would be best to get your expectations aligned before applying. Winning one is often not a guarantee, and you shouldn't depend on this as your only source of income for any period. But the money can help small businesses of all types succeed, regardless of the industry they're operating in. If nothing else, it is a resource that is worth exploring.
If you want to talk about your business or possible startup idea, call our office.